June 24-25, getting ready for Big Ben’s BBQ

Mr. Bernanke are treating us to a party @ 2:15 eastern. The question is: What are they bringing?


Well a whole lot of hubbub, for an anticipated do nothing event.
Tomorrow will be very interesting actually. Oil has been hanging out between 131 and 137 for a week and a half. This Fed (non)Announcement data point could spur a breakout.
My guess is that if the Fed were to raise the rate, the dollar would strengthen, and the gold and oil would breakout to the downside. And quite frankly, the bond market has already been selling off which has resulted in higher interest rates. If the Fed talks tough and does nothing, oil runs a risk of a breakout. Buy the energy stocks, the super spike could be near. Either way, my guess is that the market ends higher by friday. I am slightly positioned that way, however I am in the highest level of cash in 8 months (83%).
Hubbard from Columbia Business School (CBS)

Today ended down slightly, SPX -3.7 pts, and the Dow down 33. But it was a crazy day in the IWM, down 1.4%. For two days in a row the IWM has been hammered. It was the strongest index, until yesterday. I lost some coin on this issue today, but not too much. It has just moved too far too fast with the strategy I had in place. Fortunately, my SPY hedges worked well today.
I was surprisingly active for a day like today. I continue to get smaller, as the spring coils downward.
Trades:
IWM – Sold 2/3 of my positions in Jul/Aug 71c calendar for .96, Jul/Aug 73c for .86, Jul/Aug 75c for .67. I sold these on the initial morning bounce to 71.00. The IWM traveled all the way to 71.90 (R1 daily resistance level), before faultering. On the next bounce to 71.76 I bought some downside protection with 71/67p bear put spreads for 1.32. 1 vertical spread for every 5 calendar spreads. The market sank to 70.61… at 70.75 I repurchased July/Aug 73c calendars for .84.
The reason for the flipping of the 73c calendars was two fold.
1) I didn’t want to have heavy positive delta exposure during the morning session. Very easily the market could have kept going down.
2) Once I had my downside hedges (71/67p debit spread) in place, I could safely build some upside positions if we see a Fed induced bounce.
UWM – I played the IWM bounce with this double long ETF. I bought 250sh when the IWM breakout gained steam. Bought @ 50.32, exited @ 50.82. The UWM reversed back to 50.32, then exploded up to 51.30. It closed @ 49.64. I simply wanted to pick up a quick gain which offset my daily IWM loss from dumping the 73c and 75c for small losses.
SPY- Rolled short JunQuarterly 131 into the July 131 for a 1.35 credit. I rolled half the position on the initial relief bounce to take some gamma and delta risk off the table. I made this roll with SPY @ 130.65. I am still holding the other half as there is still much extrinsic premium in the June Quarterly option. I also bought another tranche of July/Sept 128p for 2.55. I picked these up with SPY @ 132.16. They have added some nice multi-month protection to the downside.
KO – I have removed 90% of this trade from my books. I was up 2 of the 20 days this trade was on. Exited 57.5 calendars for .20, and 55p calendars for .37 and .38. It has been a brutal trade for me. Too big, and it wasted too much mental capital. However, I planned it pretty well and learned some very good lessons. It is now all clear to race higher. Ugg.
VRGY – bought 1 unit for 23.41, stopped @ 22.91. The trade looked like a breakout, right before it broke down.
PRE-FED update
The Energy complex is off very heavily. They are thinking the Fed will talk tough on interest rates and inflation. This would drive down oil prices.
The markets have rallied this morning. SPX up 14, and the IWM up to it’s head and shouder neckline. My guess this was simple short covering to lessen exposure prior to the fed announcement.
Here is my thought, and the way I am leaning:
The Fed talks hawkish, which drops energy. But they do nothing, which is like kissing a sister and does nothing for the fed. The market spikes quickly on the thought that oil is going down, then drops hard because we are still in a world of hurt. Also is $110/barrel of oil really our salvation? Ah, no.
I have been fairly active this morning.
KO – Exited remainder of 57.5p calendars for .23. I just wanted to be done with this trade. Of course KO continued to march to 54.10. Sick.
APOL – Announced the CEO is leaving, the stock fell hard, I decided to get out of my 50p calendars for .82-.85. It is now marking at .90. Hmmm. I will pick some of these up if I can get them cheap again.
URBN – initiating a 4 unit position in the Sept/Aug 32.5p calendar for .55. We are 51 days out and earnings on Aug 15th. Implied volatility is relatively low in this issue, and the breakevens are 29.20 and 36.59. These are outside of the recent range. I will be adding to this over the next few days.
SPY – bought 1 of 3 131 Jul/Aug for 1.30. I was filled @ 133.05.
IWM – Idiot move of the day. I sold my downside hedge on the second break up after the fed announcement. Right before it fell. What is wrong with me?
I also have a number of calendars which I am looking to get filled on.
I will be driving down to go to a Think or Swim seminar. I am looking forward to the education.

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